The Hershey Company (HSY) Q3 2024 Prepared Remarks earnings summary

Executive summary

• Q3 2024 net sales declined 1.4% to $2,987.5M, with nine-month sales at $8,314.7M, down 2.3% year-over-year.

• Net income for Q3 2024 was $446.3M, a 12.7% decrease; adjusted EPS fell 10% to $2.34.

• Results were impacted by high cocoa prices, lower volumes, and increased business realignment expenses.

• Business realignment (Advancing Agility & Automation Initiative) incurred $104.8M in costs YTD, targeting long-term savings and operational efficiency.

• The company remains focused on long-term growth, innovation, and operational efficiency.

Financial highlights

• Gross margin for Q3 2024 was 41.3% (adjusted: 40.3%), down from 44.9% in Q3 2023.

• Operating profit for Q3 2024 was $613.2M (down 16.7%); adjusted operating profit was $654.0M (down 13.2%).

• Adjusted operating expenses (excluding advertising) declined 14% year-over-year.

• Effective tax rate for Q3 2024 was 14.0% (adjusted: 15.2%).

• Net interest expense increased 11.5% in Q3; interest expense was $44M in Q3, with full-year expected at $170M.

Outlook and guidance

• 2024 net sales growth now expected to be flat (prior: ~2%).

• Full-year adjusted EPS now expected to be down mid-single digits; reported EPS guidance lowered to (9)% to (6)% decline.

• Full-year adjusted gross margin expected to decline by approximately 250 basis points.

• Effective tax rate projected at ~11%; capex at $575M–$600M.

• Advancing Agility & Automation Initiative expected to deliver ~$100M in savings.